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Table of Contents

Lead Story

Industry self-policing: A lofty goal?

Patti Murphy
ProScribes Inc.


Industry Update

Federal Reserve sets debit interchange at 21 cents

Visa to update forecast after Fed sets debit interchange

More regs, requirements from FFIEC, PCI council

Fraudsters nailed, proactive security initiatives needed

The 25 most dangerous software errors in 2011


Wal-Mart wants to bank the underserved

Patti Murphy
ProScribes Inc.

Microfinance and profits

Patti Murphy
ProScribes Inc.

Electronic billing for SMBs

The three R's of text message marketing

Pal Flagg
Street Savings

Breaches across America

Selling Prepaid

Prepaid in brief

Is the new AmEx prepaid card a game changer?

Case study: Prepaid electricity metering


Are you ready for the NFC paradigm shift?

Scott Henry
VeriFone Inc.


Street SmartsSM:
Networking groups and referral marketing - Part 1

Bill Pirtle
MPCT Publishing Co.

Use communication to cut merchant attrition

Jeff Fortney
Clearent LLC

Finding the right payment processor

John Barrett
First Data Corp.

Social media: Putting your company's best face forward

Peggy Bekavac Olson
Strategic Marketing

What is my portfolio worth anyway?

Adam Atlas
Attorney at Law

Company Profile

Capital Access Network Inc.

New Products

Award winning loyalty technology


Less churn, more earn in health care

Revenue Maximizer
TransEngen Inc.


Make children your business



Resource Guide


A Bigger Thing

The Green Sheet Online Edition

July 11, 2011  •  Issue 11:07:01

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The three R's of text message marketing

By Pal Flagg

Editor's Note: Welcome to The Mobile Buzz, a new section of The Green Sheet that will appear periodically and is devoted to the mobile payments sphere. If you're interested in contributing to The Mobile Buzz, we'd like to hear from you. Please send an email to

The first installment of this three-part series explored the competitive advantages of mobile marketing as a value-added service (for more information, see "Text message marketing, the other mobile," by Pal Flagg, The Green Sheet, May 9, 2011, issue 11:05:01).

With text message marketing expected to represent a $50 billion market by 2014, ISOs and merchant level salespeople (MLSs) need to know about its rules, risks and potential rewards. Therefore, in this second installment, I discuss the benefits of text message marketing for merchants, along with the regulations that text message marketers must comply with and the hazards involved with noncompliant campaigns.


Text message marketing provides merchants with the ability to communicate with customers via short message service (SMS) offers delivered to mobile devices.

It has become an increasingly popular marketing tool for offering digital coupons, advertisements and loyalty programs because consumers rarely leave home without mobile phones, and text messages are universally read within minutes of receipt.

Additionally, mobile marketing removes the necessity of having to clip and carry paper offers, which adds convenience for consumers that encourages mobile coupon redemption.

It's easy for customers to join a merchant's mobile marketing program. Some mobile vendors offer many ways for customers to opt in: via "text to join" on mobile devices, web links and social media, integrated voice response systems, POS systems, quick response codes, or even by entering mobile phone numbers at ATMs.

Mobile marketing offers distinct advantages over traditional advertising and coupons due to the instantaneous nature of text messages, as merchants can quickly react to current market conditions, such as slow sales or dramatic weather events, by offering customers discounts for shopping at their stores.

Some mobile marketing programs take advantage of the personal nature of the mobile device and its connectivity with credit card terminals. These systems send specific messages to individual shoppers based upon their actual purchasing behavior, a capability that can significantly boost customer satisfaction. The most effective mobile marketing products enable merchants to track coupon redemption and revenue generated by their text message campaigns.


The Federal Communications Commission and the mobile carriers have relationships somewhat analogous to the card brands and the banks. The FCC establishes and enforces the rules governing how mobile carriers conduct business, just like Visa Inc. and MasterCard Worldwide enforce the rules for their member banks.

Like banks having authority over ISOs, mobile carriers such as AT&T and Verizon Wireless exercise significant compliance authority over their clients, the text message providers. The technical, structural, content and flow guidelines for mobile marketing messages are available in a consolidated form within the Mobile Marketing Association's best practices document. (For more details, see the resources section at the bottom of this article.)


There are significant risks for ISOs and their merchants using shared short codes. If formal notification - by way of a program brief - is not submitted to the wireless carriers on behalf of each new program on a shared short code, the new program is in violation of regulations and may be terminated at any time.

Even if a business files a shared code program brief with the wireless carriers, the business is still at risk because it does not know if the other sharing participants have filed program briefs.

It's possible that other sharing participants have not filed such briefs because they are conducting prohibited or "phantom" programs, such as adult content, unlicensed entertainment (music, etc.) or premium charge cramming (a practice of placing unauthorized charges on a consumer's wireless bill).

There is simply no way for a business to know if prohibited traffic is being sent via its shared code. Of course, having more sharing participants involved with a short code increases the risk that wireless carriers will audit and subsequently terminate that code's connectivity.

How to avoid risks

Unfortunately, some shared short code resellers are either unaware of the guidelines or choose to ignore them. It is a "buyer beware" marketplace. To reduce the risk of reselling a product that puts merchants' mobile marketing campaigns and your residual-based business in jeopardy, avoid shared short codes altogether. If you are already representing a product that uses a shared short code:

If you cannot justify the expense of a dedicated short code and the application to power it, establish a relationship with a company that does not use a shared short code or has filed an approved, certified program brief.

The mobile opportunity is already significant and is growing exponentially. It's important to align yourself with a mobile marketing company that adheres to industry regulations and best practices in order to be in the best position to reap the rewards.


Mobile Marketing Association, U. S. Consumer Best Practices:

"Risks for ISOs, Agents, and SMBs Involved with Non-Compliant Programs":

"5 Step Test to Determine if a Short Code is Shared":

Pal Flagg is the Chief Operating Officer at Street Savings. He is responsible for daily operations at the company, including sales, marketing and product development. He brings to Street Savings decades of experience in the advertising, media and wireless industries. As Vice President of Client Services at Comcast Spotlight, Pal oversaw the Client Services group, representing all Comcast advertising opportunities to Fortune 100 clients. Prior to this position, Pal led the client services and new business development efforts for Adlink. You can reach him at

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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